Canada's outdated regulatory system impedes competitiveness

Instead of supporting the competitiveness of the Canadian business community, our regulatory system is one of our key impediments to overcome. In 2011, the World Economic Forum identified “inefficient government bureaucracy” as the most problematic factor in doing business in Canada.

Perrin Beatty is President and CEO of the Canadian Chamber of Commerce. He led the Canadian Manufacturers & Exporters from 1999-2007 and the CBC from 1995-1999. He was an MP for 21 years and served as Minister of State (Treasury Board) in Joe Clark’s government, at the time the youngest person ever to serve in a federal Cabinet, and held six senior portfolios in subsequent PC governments.

As the federal government approaches its first budget with a parliamentary majority, it has to confront Canada’s inefficient and outdated regulatory processes.

The delays and duplications that major projects have to overcome today can simply smother them, even when the benefits to the public would be tremendous.

Last year the federal government’s Red Tape Reduction Commission heard from a Calgary promoter who told them he needed 10 permits from 21 organizations to develop a wind farm. The whole effort took two years, by which time some of the technologies employed in the project were out of date.

The Canadian Chamber of Commerce has identified our cumbersome regulatory system as one of the top 10 barriers to Canadian competitiveness. The added delays and costs imposed by the overcomplicated process dull our competitive edge in global markets and place Canada’s standard of living at risk.

Having a broken regulatory system impedes our ability to take advantage of an historic opportunity. Our vast natural resource sector is driving our prosperity today.

Developed in a sustainable manner, this resource wealth and the associated infrastructure will also be the basis for Canada’s growth in years to come. A recent Conference Board study stated that for every $100 million invested in the electricity infrastructure up to 2030, real GDP will be boosted by $86 million and 1,200 jobs will be created.

Regulation has a critical role in business success. Effective regulation can support competitiveness and ensure environmental sustainability, ethical business markets, worker health and industrial safety. The most competitive economies in the world — Switzerland, Sweden and Finland — have powerful regulatory systems that are also highly competitive. Canadian business understands this reality.

Unfortunately, instead of supporting the competitiveness of the Canadian business community, our regulatory system is one of our key impediments to overcome. In 2011, the World Economic Forum identified “inefficient government bureaucracy” as the most problematic factor in doing business in Canada. The time, expense and uncertainty large projects need to navigate the regulatory process erode the competitiveness of Canadian business.

The duplication and conflict that too often exist between federal and provincial authorities in natural resource project assessments mean that projects are reviewed and approved by one government, only to have to face a separate review by another. Even among federal agencies, there is little effective coordination. Parliament has established myriad independent processes under different statutes — Fisheries Act, Species at Risk, Navigable Waters Act, to name a few — that all must be carried out to ensure the legality of a license. This regulatory hodge-podge frustrates both project proponents and the officials who have to administer it.

As we bureaucratize these key decisions, we also undermine Parliament’s role, blurring accountability for some of the most important economic and social decisions our country will take. For example, more than 4,000 interveners have signed up to appear in the hearings on the proposed Northern Gateway Pipeline. A large proportion of the interveners will raise issues that are more political than technical. They have every right to do so, but it is our elected officials, not technocrats, who should respond to them.

Today, developing a new mine in the Northwest Territories requires a minimum of 10 years, thanks to regulatory delays and uncertainty caused by the existence of no fewer than five review boards. Even projects with clear environmental benefits, like the wind project I mentioned earlier, are not immune.

The federal government is working on this problem. It has signed agreements with eight of Canada’s provinces and territories to coordinate a single environmental assessment process in some cases. It has also established an office to coordinate the various federal processes. It was a good idea, but officials there can’t simply ignore the law, and the law requires the current inefficient approach.

This is a key task for the federal government. We need new laws which preserve the integrity of environmental review while improving efficiency. As the government invests its majority in the key challenges facing Canada, this must be a high priority.

Canadians are blessed with our richness of natural resources. Properly managed and brought to market in a way that respects environmental and social needs, they will create prosperity for families throughout Canada. But to be good stewards and to benefit from our resource inheritance, we need a regulatory system that is both effective and efficient. Today’s regulatory jungle falls far short of that goal.